Why Disaster Recovery and Systems Uptime Matter in Software or Systems Agreements
When businesses sign agreements for software or systems — whether it’s cloud services, personalized software, or IT infrastructure — two key points are often overlooked: disaster recovery and systems uptime. These may not sound exciting, but they play a huge role in keeping your business running smoothly and avoiding costly disruptions.
Let’s break down why these two things are so important and how including them clearly in your agreements can protect your business.
What is Systems Uptime?
Systems uptime refers to the amount of time that a computer system, software service, or online platform is up and running — meaning it’s available for users to access and use without issues.
Think of it like this: if you’re using an online banking app, you expect it to work every time you open it. If the app crashes or is down for maintenance or technical problems, that’s considered downtime . The opposite — when everything is working smoothly — is called uptime .
Uptime is critical is certain sectors and failure to maintain a high uptime can result in fines, as what happened to Maybank – fined RM4.32 million and CIMB – fined for RM760,000.00 https://www.malaymail.com/news/malaysia/2024/08/14/bnm-slaps-rm432m-fine-on-maybank-rm760000-on-cimb-for-service-outages/147002
Uptime is usually measured as a percentage over a certain period (like a month or year). For example:
- 99% uptime means the system was down for 1% of the time.
- 99.9% uptime means only 0.1% of the time was downtime — which sounds small, but even that can add up.
Why Does Uptime Matter?
Uptime is important because most businesses today rely heavily on digital systems to run operations, serve customers, and make money. If those systems are not available, it can cause real problems.
Here’s why uptime matters:
- Business Keeps Running
If your company uses cloud-based tools for sales, customer support, or internal communication, and they go down, your employees might not be able to do their jobs.
Example:
An e-commerce store depends on its website being online 24/7. If the site goes down during a major sale, the business could lose thousands of dollars in just a few hours.
- Customer Satisfaction
When services or apps are unreliable, customers get frustrated and may take their business elsewhere.
Example:
A customer trying to book a flight online finds the website is slow or unavailable. They’ll likely switch to a competitor’s site instead.
- Reputation
Frequent downtime can hurt a company’s reputation. People expect services to be fast and reliable — especially online.
Example:
A software company promises a powerful tool for managing teams, but users complain it’s often offline. Over time, people stop trusting the product.
- Financial Losses
Downtime can cost money directly (lost sales, missed opportunities) and indirectly (support costs, overtime to fix problems).
Example:
A payment processing service experiences downtime during peak shopping hours. Merchants can’t accept payments, so they lose revenue — and the service provider may face complaints or penalties.
How Is Uptime Measured?
Providers often track uptime monthly or annually. Here’s a quick idea of how much downtime different uptime percentages allow:
- 99% has a downtime of 7 hours per month and 3.5 days per year;
- 99.5% has a downtime of 3.5 hours per month and 1.8 days per year;
- 99.9% has a downtime of 43 minutes per month and 8.7 hours per year;
- 99.99% has a downtime of 4 minutes per month and 52 minutes per year.
As you can see, even “99% uptime” allows for several hours of downtime — which might not be acceptable depending on your business needs.
Compare this uptime for Malaysian financial institutions as stated in the Financial Services Act, read with the Risk Management in Technology (RMiT) Policy Document which states that cumulative unplanned downtime affecting user interfaces must not exceed 4 hours over a rolling 12-month period, with a maximum tolerable downtime of 120 minutes per incident https://www.bnm.gov.my/documents/20124/938039/PD-RMiT-June2023.pdf
How Uptime Appears in Agreements
Most software or IT service agreements include something called an “uptime guarantee” or “service availability clause.” This part of the contract tells you:
- What percentage of uptime the provider promises
- How they measure it
- What happens if they fail to meet that standard
Sometimes, providers offer compensation (like service credits or refunds) if uptime falls below the agreed level.
Example Clause from a Contract:
“The service will maintain an uptime of at least 99.9% each calendar month. If uptime drops below this level, the customer will receive a 5% credit for every full hour of unplanned downtime beyond the allowed limit.”
This makes the provider responsible for keeping the system running and gives the customer some protection if things go wrong.
Real-Life Example
Let’s say a marketing agency uses a cloud-based email automation tool. Their agreement says the service has a 99.95% uptime guarantee.
One month, the service suffers two outages:
- One lasting 30 minutes
- Another lasting 45 minutes
Total downtime = 1 hour 15 minutes.
Because the provider guarantees 99.95% uptime, and the downtime exceeded the allowed limit, the agency gets a small credit on their next bill — maybe 10% off.
That doesn’t fully make up for the inconvenience, but it shows the provider takes uptime seriously and offers some form of accountability.
Summary
Systems uptime is simply how often a digital system or service is available and working properly. It’s a critical part of any technology agreement because:
- It keeps your business running smoothly
- Helps avoid financial losses
- Protects your customers’ experience
- Holds service providers accountable
When signing a software or systems agreement, don’t just skim over the uptime section. Understand what percentage is promised, how it’s tracked, and what protections you have if things go down.
In short: More uptime means fewer headaches — and better business performance.
What is Disaster Recovery?
Disaster recovery is a plan or process that helps a business get its systems and data back online after a serious problem — like a natural disaster, cyberattack, hardware failure, or human error.
Think of it like having an emergency exit plan in case something goes wrong with your technology.
Just like you have fire drills for real fires, disaster recovery plans help companies deal with unexpected tech problems and bounce back quickly.
Why Is Disaster Recovery Important?
Even small issues can cause big disruptions. Imagine:
- A server crashes and customer data are lost
- A hacker encrypts all your files (this is called ransomware) https://theedgemalaysia.com/node/751731
- A storm floods the building where your servers are kept. Remember the Sri Muda, Shah Alam floods in 2021 https://www.thevibes.com/articles/gallery/50215/photos-when-taman-sri-muda-collapsed..-again
Without a disaster recovery plan, your business could be down for hours, days, or even longer. That means:
- Lost sales or income
- Frustrated customers
- Damaged reputation
- Extra costs to fix things manually or rebuild systems
A good disaster recovery plan makes sure you can recover your data and get your systems working again fast, even after a major incident.
What Does a Disaster Recovery Plan Include?
Here are the main parts of a solid disaster recovery plan:
- Data Backups
This is like making copies of all your important information regularly. If something gets lost or damaged, you can restore it from a backup.
- How often are backups taken? (Daily? Hourly?)
- Where are they stored? (In the cloud? On-site? Off-site?)
- Are backups tested to make sure they work?
- Recovery Time Objective (RTO)
This is how fast your systems need to be back up and running after a disaster.
For example:
- RTO = 4 hours → The system must be restored within 4 hours.
- RTO = 24 hours → You can afford to wait a full day.
The faster the RTO, the more complex (and possibly expensive) the recovery plan might be.
- Recovery Point Objective (RPO)
This is how much data you’re willing to lose.
For example:
- RPO = 1 hour → You’re okay losing up to 1 hour of data.
- RPO = 5 minutes → You want backups every few minutes so very little data is lost.
If backups only happen once a day and a disaster happens just before the next backup, you could lose a whole day’s worth of data.
- Emergency Response Team
Who will handle the situation when a disaster hits? This team might include IT staff, external vendors, or cloud service providers.
They know exactly what steps to take to get things back on track.
- Testing the Plan
It’s not enough to just write a plan — you have to test it. Regular testing ensures everything works when needed.
Imagine practicing a fire drill: if you never practice, people might panic or not know what to do during a real fire.
Same thing with disaster recovery — regular tests ensure everyone knows their role.
Real-Life Example
Let’s say a company uses an online invoicing tool to manage all its billing.
One day, a cyberattack deletes most of the data from the provider’s servers.
Because the provider has a strong disaster recovery plan, they:
- Detect the attack quickly
- Shut down affected systems to stop further damage
- Restore data from recent backups
- Bring the system back online within 3 hours
As a result:
- Customers don’t lose any invoices
- The company doesn’t miss a beat
- Business continues normally
If there was no disaster recovery plan, it could take days or weeks to rebuild the system — and some data might be gone forever.
Why You Need Both in Your Agreement
- Protection Against Downtime Losses
Uptime clauses help ensure you’re compensated when systems fail. They also push providers to keep their services reliable. - Clarity on Recovery Time
A disaster recovery clause should say how fast the provider must get systems back up and running. For example, “data must be restored within 4 hours of an outage.” - Trust and Accountability
When these terms are written into your agreement, both sides know what to expect. It creates trust and holds the provider accountable. - Business Continuity
With good uptime and recovery plans, your business keeps running — even during unexpected events.
Tips for Writing These Clauses
Here’s what to look for or ask for in your agreement:
- Uptime Guarantee: At least 99.5%, preferably higher.
- Compensation Plan: What happens if uptime drops below the agreed level?
- Disaster Recovery Plan: Does the provider test their recovery process regularly?
- Recovery Time Objective (RTO): How quickly will systems come back online after a problem?
- Data Backup Frequency: How often is your data backed up?
Final Thoughts
Disaster recovery and systems uptime might not be the most exciting parts of a software or systems agreement, but they are essential for protecting your business. Taking the time to understand and detail these points before signing any agreement can save you a lot of headaches — and money — later.
So next time you’re reviewing a contract, don’t skip over these sections. Ask questions, clarify expectations, and make sure your business is prepared for the unexpected.
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